Who doesn’t like to stay on top of their competitors? From digital marketing agencies to B2B companies, each brand likes to think out of the box, innovate new trends and take the road that hasn’t been trodden on before. Here is where competitive analysis comes into effect.
Competitive analysis can help you determine where your company is succeeding, where it has room for improvement, and which trends you should anticipate.
When your company isn’t moving as quickly as you’d like or when rivals are trying to secure orders from your target customer, conduct a competitive analysis.
A competitive analysis should look at the features, market share, pricing, marketing, differentiators, strengths, weaknesses, geography, culture, and customer reviews of your competitors.
If your recent competitor’s analysis only involves a quick cursory glance at their website and social media pages, trust us, you’re missing out. With proper competitive analysis, you can enhance your brand, improve your business and create efficient strategies that set you apart from your competitors. Keep reading to learn more!
Key Stats
• 90% of Fortune 500 companies already use competitive intelligence to gain an advantage.
• More than 73% of businesses devote 20% of their IT budgets to research and data analytics.
• 74% of enterprises report that their main competitors are already successfully differentiating their competitive strengths with clients, the media, and investors using Big Data analytics.
• 57% of businesses say gaining a competitive advantage is one of their top three priorities in their industry.
• 94% of companies intend to invest in competitive intelligence. With so many companies looking for data-driven solutions for their business ventures, the only way to stay afloat is to join in.
What Is Competitive Analysis?
A competitive analysis, also known as a competitor analysis, is a comparison of competing strategies used to assess the strengths and weaknesses of various marketing approaches within an industry.
It assists a company in determining possible benefits and barriers within a market surrounding a product or service, and it generally assists brands in monitoring how direct and indirect competitors execute tactics such as distribution, marketing, and pricing.
What is an example of competitive analysis?
The competitive analysis can differ greatly depending on what you want to know about your competitors. You could conduct a competitive analysis centered on a specific aspect, such as a competitor’s website strategy, or you could take a broad peek at their marketing strategy as a whole. The ultimate goal is to assist you in understanding your strengths and reaching out to new potential customers.
There are numerous ways to organize a competitive analysis, so let’s take a look at the various types of information that are commonly found in this type of research.
If you’re conducting an intense competition analysis, there are a few key elements to consider regarding competitors’ market positioning, such as:
- Who are their target customers are
- What is their key differentiator/unique value add for their company and products is
- Key features/benefits highlighted in sales materials
- Price points for items throughout a variety of marketplaces
- Shipping methods; Funding or venture capital received
These sections will give you a closer look at what differentiates your competitors and how they’re working to make a distinction themselves from the competition in your niche.
If you want to examine more specific aspects of your competitors’ approaches, consider including sections like these in your competitor analysis:
- Website features (such as product images, search tools, design/layout, and so on)
- Elements of the customer experience (checkout workflows, mobile UX, customer support, etc.)
- Copywriting strategies (calls to action, product descriptions, etc.)
- Social media strategy (channels used, frequency of posting, engagement, etc.)
- Content marketing strategies (types of content, blog topics, etc.)
- Marketing strategies (frequency of discounts, types of promotions, etc.)
- Email marketing strategy (Newsletter, promos, abandoned cart emails, etc.)
- Customer feedback (language used around products, recurring complaints, etc.)
In general, a competitive analysis can take many different shapes and patterns based on what a business wants to assess about its contenders objectively this gives you an idea of what might be included within the various sections.
Why Competitor Analysis Matters In Ecommerce
Maybe you’re internally debating about the importance of competitive analysis as a marketer or business owner. We assure you, it’s related.
The primary reason this activity is important is that you can’t compete effectively unless you know who your competitors are — and you can’t differentiate yourself unless you know what makes you unique. If you’re starting an eCommerce business, competitor analysis will help you to make better marketing decisions, identify industry trends, compare to competitors, establish a distinct value proposition, determine to price (upmarket, downmarket, or midmarket), discover new ways to communicate with customers, or even new customers to communicate, while finding a marketing gap and making sure there’s a market in it. This type of study isn’t just for new e-commerce retailers. A competitor analysis can and should be a comprehensive plan that evolves as a business grows and matures.
Retaining a resource like this is an effective way to stay on top of how your company compares to the competition right now — but it can also help provide a specific pathway on how you’ll excel in the future.
Running A Competitor Analysis
When you’re ready to conduct your competitive analysis, follow the instructions highlighted here to ensure that your research is structured and organized properly
1. Choose 7–10 competitors.
Begin by conducting searches on Amazon, Google, and Alexa around your product and business idea to identify the relevant competitors to include in your analysis.
You want a mix that includes competitors that –
• Sell similar products or have a similar model of business.
• Market to roughly comparable and slightly different demographics.
• Are both new and experienced in the marketplace.
Stick with a group of seven to ten relevant competitors to put together such a diverse list of competitors that will provide you with a comprehensive look at the competitive landscape that isn’t too small or too large.
2. Make a spreadsheet.
As you gather information about these competitors, keep it organized in a table or spreadsheet that can be easily shared and updated over time. This document will examine and contrast rivals based on various criteria such as price range, product offerings, social media engagement, lead generation content, first-time visitor offers, and other characteristics worth comparing.
3. Determine the types of competitors.
Beginning with your list of competing companies, categorize each one as a primary or a secondary competitor in your spreadsheet. This will allow you to better ascertain how they will relate to your company.
• Direct competitors, or primary competitors, are businesses that sell a similar model to a similar audience to yours. Nike and Adidas are two primary competitors.
• Indirect competitors are those who offer a higher-end or lower-end version of your item to a different audience. Victoria’s Secret and Walmart are two examples of secondary competitors.
• Tertiary competitors are similar brands that sell to the same audience but do not market the same items as you or compete directly with you in any way. If they decide to expand their business, they may become potential partners or future competitors. Gatorade and Under Armour are two such brands.
4. Determine the positioning of your competitors
A company’s most effective marketing tool is positioning. Good positioning allows you to connect with your target market and keep them around for a longer period. It also impacts your values, messaging, and overall business strategy.
This is why understanding your competitors’ positioning is critical. You can learn how to differentiate yourself apart and establish a positive reputation in the eyes of your customers. Differentiation also aids in increasing brand awareness and justifying your prices, both of which have an impact on your bottom line.
Examine the following major channels to determine the positioning and messaging such as press releases, website copy, events, interviews, and product copy.
When determining your competitors’ positioning, consider the following:
- What story do they tell their customers?
- How do they market their products?
- What is their business description?
- How do they describe their one-of-a-kind value proposition?
Recognize how competitors interact with their customers, fans, employees, partners, and shareholders. You’ll be capable of positioning yourself differently and differentiating yourself from competitors if you can identify their communication framework.
5. Determine your competitive advantage and product offerings.
Once you’ve figured out what your competitors are saying, look at their strategic advantage and product or service offering. In comparison to their competitors, the vast majority of successful businesses have a clear “secret sauce”.
Take the time to compare your competitors’ goods and services to your own. Examine reviews online of your target market to learn why consumers choose their business. They may offer comparable products at a lower price or are concerned with sustainability. In any case, you’ll want to understand their benefit and find out how you can provide something better.
6. Learn how your competitors’ products are marketed.
The trick to the most popular ecommerce stores is marketing. A great offering is the starting point, but marketing propels you to the top. Regretfully, most businesses fail to conduct a marketing audit of their competitors. They believe everybody is on Instagram, that they are running Facebook ads, and that their website is search engine optimised.
And there are a lot of them. Understanding how your competing companies market their products, on the other hand, necessitates a different approach. You’re interested in learning about the offers they’re promoting, how they’re building and handling their contact lists, and how they’re distributing content online.
Along with your software and tool research, it’s a good idea to do some hands-on competitive research as well. Take on the role of a prospective customer and investigate what your rival companies are doing in terms of marketing. You can accomplish this by subscribing to their newsletters and blogs, following them on social media, leaving an item in the shopping cart or by purchasing a product.
As you carry out these activities, keep extensive notes on every tactic you encounter. You can notice interesting approaches your competition is using to gain more customers and drive sales by analysing their strategies to cart abandonment and having a look at how they convey support via social media (and beyond). The insights you gain during this stage can be extremely beneficial to your sales team in particular.
7. Consider performing a SWOT analysis in addition to gathering data.
It’s a framework for competitive analysis that lists your company’s strengths, weaknesses, opportunities, and threats and can help you shape your overall marketing strategy. SWOT analyses your competitors’ strengths and contrasts them to yours in order to identify areas for improvement.
Strengths and weaknesses are concerned with the present. They are elements that you have control over and can change with time, such as product offering, partnerships, intellectual property, employee count, market share and assets.
Once you’ve determined which direct competitors you’ll be researching, it’s time to begin conducting research and gathering data for your competitive analysis. The good news is that there are numerous tools and software available today that can create data collection for your competitive analysis easier, more efficient, and more accurate.
Let’s take a glance at a few various resources that can help you gain key insights into various aspects of your competition’s marketing strategy, from product or service positioning to social media efforts and content marketing.
• SEO Analysis — Define your demographic, check top-performing organic keywords and see competitors’ organic search performance.
• PPC/Keyword Performance — Get monthly insights into website visits, look into profitable keywords and analyze backlinks.
• Social Media Performance — Average engagement rate of your competitor, followers demographic, performance metrics and key influencers.
• Email Marketing — Spot trends and changes, aggregate email and gain insights.
• Content Marketing — Watch out for trending topics and monitor backlinks.
Perils Of Competitive Analysis In Marketing
Now that you understand how to construct a competitive assessment, let’s go over some of the major pitfalls to avoid that could throw off the insights you’ve gathered.
1. Competitive analysis is not a one-time event.
Never revisiting your original insights (or, for that matter, never updating them) can lead to inaccurate data and poor decisions. Because businesses are constantly changing, it’s important to realize that trying to keep an eye on your competitors is a continuous process, not something you do once and never again. Finally, to boost your market share, you must consistently be at the top of the game.
2. Confirmation bias exists
As individuals, we have a propensity to base our decisions on our assumptions. This is known as confirmation bias. As you conduct your analysis, it is critical to be conscious of your basic assumptions and thoroughly test them rather than relying on what you “think” is true about your competing companies. Allow the data to guide your choices rather than relying on assumptions.
3. Lots Of Data & No Action
If you put in the effort to conduct a competitor analysis, make sure you act on the results rather than burying them in a vague file folder on your computer. Create a strategic plan based on your findings and implement the unique angles and tactics you found during this process.
4. Working harder rather than smarter.
With so many great resources available today that help streamline the data collection process for competitive analysis, creating a leading, extremely accurate comparative evaluation is easier than ever. Don’t reinvent the wheel or do things the hard way: invest in tools that accelerate the process and provide the useful insights you need to make intelligent, data-backed business decisions.
5. Starting without a plan.
If you are aimless while compiling your competitive analysis and don’t have a clear end goal, the work will be much, much more difficult. Describe your objective and what you look forward to learning about your competition before beginning your research. What do you hope to achieve? What do you intend to construct? After all, it is your own company!
6. The Past & The Present
When analysing competitor data, make sure to look at how businesses have risen and made progress over time rather than focusing on a single fixed point.
Knowing how your competitors’ tactics have evolved over time can be just as useful as knowing what they did in the beginning (or what they’re doing now). Understanding past, current, and future industry trends will assist you in making more informed decisions.
Embarking On A New Journey With Competitive Analysis
Starting a business requires competitive intelligence. You can stay ahead of your competition by conducting ongoing market competition analysis. You’ll be able to launch new products, enter new markets, and track the customers of your competitors, giving you a much-needed edge to small businesses that keep your company agile.
Competitive analysis is an essential tool when it comes to digital marketing. Staying on top of trends isn’t enough, you should be a few steps ahead of your competitors too. All of that is possible with PROS — a web development and digital marketing company that believes in growth rooted in hard work.
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